What makes LinkedIn’s chairman a great mentor

Wednesday

Dec 12, 2012 at 9:00 AMDec 12, 2012 at 9:52 AM

By Peter S. Cohan WALL & MAIN

Lee Hower is a Boston venture capitalist who has worked with some of Silicon Valley's biggest names. And the lessons he's learned from the brains behind PayPal and LinkedIn – the business networking site – are worth heeding.

As he explained in a November 16 interview, after getting degrees in finance, management and systems engineering from the University of Pennsylvania, he got a job at X.com – one of the companies that merged to form PayPal – that was started by Elon Musk, another Penn grad.

"I joined PayPal when it had 30 people as a Product Manager and later moved to a business development role," Mr. Hower said. "I stayed through its 2002 IPO and the acquisition by eBay."

And from there, he followed Reid Hoffman – Mr. Hower's "mentor for the last 12 years" – to LinkedIn. As Mr. Hower explained, "Reid pulled me in, and then also some people that he’d worked with in SocialNet -- his start-up prior to PayPal. He wanted to start with people whose capabilities he knew he could trust. And so the group of us started LinkedIn together at the end of 2002."

Unlike many start-ups, like PayPal, that "pivot" – e.g., try different business models and fail a few times before hitting on a winner – LinkedIn succeeded with its original idea. According to Mr. Hower, "We envisioned that companies would pay for using LinkedIn to recruit or market and that some portion of the consumers would pay for a premium account. And both of those two things make up the vast majority of LinkedIn revenue today."

In LinkedIn's early days, Mr. Hower helped raise capital with Mr. Hoffman and ran its financial operations. Mr. Hower described LinkedIn as the 'internetization' of Mr. Hoffman's working style. As Mr. Hower explained, LinkedIn is "Reid’s work style and Reid’s brain on the internet. He’s a consummate networker -- he thinks about building networks of people and bringing groups of people together."

And as a mentor, Mr. Hower found Mr. Hoffman to be unusually selfless – that is, he really wanted to understand Mr. Hower's talents and interests and offer advice that would help Mr. Hower flourish – even if that meant it would not be in Mr. Hoffman's best short-term interest.

But beyond giving individuals valuable advice, Mr. Hoffman has also been generous about helping people do something with that advice by introducing them to the right people. As Mr. Hower explained, "Reid’s always been an uber-networker and he’s been very able and willing to make introductions and help [individuals] get where they’re hoping to go."

Another thing that makes Mr. Hoffman unique is his ability to think about where things will be in five years and how to invest now in order to profit from that vision. Since Mr. Hoffman was able to do that well, he did not get bogged down in the wake of the dot-com crash with thinking about how the consumer Internet might try to rebound.

Instead, in 2003 Mr. Hoffman saw – correctly, as it turned out – that social networks would be important for business. As Mr. Hower explained, Mr. Hoffman "was thinking about networks of people, products, and economic activity – which is why he ended up starting LinkedIn and investing in Facebook and Zynga and others."

For family reasons, Mr. Hower moved to Boston, worked in a venture capital firm before 2010 when he founded NextView Ventures – a seed-stage fund in Boston.

Mr. Hower believes that start-ups need to be in a place that values the willingness to take huge risks to upend existing industries and to be surrounded by other risk takers who are willing to share their experiences. As Mr. Hower explained, "If you’re a founder, you want to be around other founders so that you can learn from them, share best practices and commiserate. One of Reid’s favorite sayings is: 'A start up is like throwing yourself off a cliff and assembling an airplane on the way down.'"

NextView throws its own ingredients into the cauldron. These include capital, advice on product strategy, help with hiring, and a view of where a start-up's industry is heading.

And when Mr. Hower advises people entering the Boston Start-up Common, he urges them to have a vision of where they want to be and to take short-term steps – what he calls tacking – that will position them to realize that vision. For example, he would advise someone who aspires to run a start-up to "join a 30 or 40-person start up rather than IBM" when they graduate from school.

He also advises aspiring entrepreneurs to think more about who they will work with rather than what the start-up will do. As Mr. Hower said, "It’s actually more important to be thinking about finding your co-founders of that business, rather than thinking about what kind of company you want to start. No hugely successful company was started by just one person."

Mr. Hower believes that deciding who to invite to the start-up table is consistent with what I wrote about in "Hungry Start-up Strategy" – knowing yourself. Mr. Hower advises people to, "Start by an evaluation of yourself: What do I think I’m good at or not good at? What do I like to do or not like to do? What are my personality traits and personal strengths and how do I think about complementing those?"

Ultimately, Mr. Hower believes that building winning start-up teams is crucial to spurring entrepreneurial activity. As he said, "It really comes back to trust: How do you pick a co-founder? Whom do you trust? Whom do you like to work with? Whom do you mesh well with?"

If you hope to rise higher, answering these questions in the right way can help you get there.

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